The trade war begun with the imposition of US tariffs on other countries, gradually becomes a duel. Some nations retreated to retaliation in the world’s largest economy after Donald Trump announced. Canada and agreed to try an agreement with the White House, but China follows the arm breaking with the Americans, retalizing, to the same extent, the escalation of tariffs that have been applied to their exports.
In this current conjuncture, Brazil tends to gain space with its agricultural production within the Chinese market. The US is our main competitor in China sales in at least six products: soy, corn, beef, chicken, pigs and cotton.
“In these products, or they [os americanos] They are the largest or are among the three main exporters of the Chinese, ”explained Marcos Jank, coordinator of the Insper Agro Global Center, Infomoney. “Obviously we will be benefited, but I do not see a benefit as large as it was in 2017 for the grains [soja e milho]”.
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In the tariff of Trump’s first term, Brazilian grain exports to China doubled and surpassed sales made by the United States. “We become China’s biggest supplier at that time, and we are no longer. Now we have no way to grow so much in grains,” says Jank.
There is great potential, on the other hand, for Brazilian meat exports. China buys 50% of the beef that Brazil exports. While the United States, our second largest buyer, is experiencing a crisis in this segment, with the smallest herd in over 70 years.
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There are also chances of additional markets for Brazil when the 90 days of break in the collection of reciprocal tariffs by the United States is over, according to Jank. However, the bilateral negotiation stage, which will occur during this period, should bring more visibility about the future of commercial flows.
“The geopolitical and even ideological question is important. It would not surprise me if, at some point, Trump would create some ease for Argentina, our competitor, because there is an ideological approach“Jank says. In this sense, countries closer to China may find more difficulties in negotiations with the United States.
Check out the main excerpts of the interview with Marcos Jank, Coordinator of the Insper Agro Global Center.
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Infoomoney: What does this trade war unfold so far it brings from perspective to Brazilian agribusiness?
Marcos Jank: Finding good trade war is a mistake as it always involves increasing tariffs, market restriction. Made this caveat, Brazil has done very well so far and, today the gain is total [em termos de exportações de grãos]. But the Chinese will not want to buy everything from the southern hemisphere. The harvests are alternated: we do our harvests in the first half, the Americans offer grains in the second. This allows a more regular purchase flow throughout the year through China. They depend a lot on soy imports and slightly less on corn import. At this time, the tariff placed by the United States [de 125% até a publicação desta reportagem] It is prohibitive. But I have the impression that there will be some negotiation to make it easier. It is in the interest of China to be able to buy soy from the northern hemisphere.
Infoomoney: Do you believe the commercial tensions between the two countries will be softened?
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MJ: The fight between the United States and China seems to have come to stay. The Chinese are reacting in the same coin and do not seem willing to sit down to negotiate. They are willing to go forward and eventually occupy space of the United States. In the worst scenario, which I call “Great Depression 2”, we would have protectionist spiral that can have as a big winner to China. I believe the Chinese have been preparing for the trade war for a long time. Since 2017 they are studying this subject.
IM: And what is your assessment of Brazil’s posture so far in this trade war?
MJ: I think so far, the government has been cautious. Despite there is no ideological approach between Lula and Trump, I think the becoming quieter and distant is very positive right now. Mainly in agro. We need to put ourselves in the world as a reliable food provider, agricultural products, for any country, any client. So it’s not time for us to take sides.
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IM: What conditions Brazil has today to replace agricultural exports from countries that may be affected by “tariff”?
MJ: Brazil is the most agile country in the world today in terms of producer reaction at good prices. If China stops buying completely from the United States, it opens markets and prices improve. This does not mean production is already available, it needs to be planted, and nowadays there are major stocks in the world. It is nothing immediate, because each culture has a cycle. But I would say that Brazil has been revealed with enormous reaction capacity to both favorable and challenging situations.
IM: Can high interest rates be an obstacle to the producer in a scenario of greater international demand?
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MJ: What most kills the stimulus to production is high interest rates. Selic’s current level is very high for all agriculture, which plants at a time of year and reaps the other. It has the charging of production within the crop and also from one crop to the other. Brazil does not have sufficient storage structure. Interest is a sword in the producer’s head.
